India's industrial production surged 7.3% year-on-year in June, its fastest pace in nearly two years, according to official data released on Tuesday. The reading, up from 5.0% in May, comfortably beat economists' expectations of around 5.7% growth, per a Reuters poll, underscoring the resilience of the domestic economy amid global headwinds.
Sectoral Breakdown
Manufacturing output rose to 7.8% in June from 5.2% in May, while electricity and gas supply expanded 10.6% (up from 10.3%). Mining and quarrying returned to growth, expanding 1% after contracting 1.4% in May. Water supply, sewage and waste management grew 6.1%, up from 5.5%.
| Sector | May 2025 (YoY) | June 2025 (YoY) |
|---|---|---|
| Overall IIP | 5.0% | 7.3% |
| Manufacturing | 5.2% | 7.8% |
| Electricity & Gas | 10.3% | 10.6% |
| Mining & Quarrying | -1.4% | 1.0% |
| Water Supply & Waste Mgmt | 5.5% | 6.1% |
Among use-based categories, capital goods, primary goods and intermediate goods were the largest contributors. Manufacturing was supported by strong growth in electrical equipment (34%), motor vehicles, trailers and semi-trailers (17.5%), and food products (10.8%). Of the 23 industry groups in manufacturing, 19 registered positive growth during the month.
Expert Insights
"It is comforting to note that India's industrial sector has accelerated the growth momentum even amid global uncertainties and elevated energy prices," said Rajani Sinha, chief economist at CareEdge Rating.
Sakshi Gupta, principal economist at HDFC Bank, noted that the strong Index of Industrial Production (IIP) reading, combined with other high-frequency indicators, suggests first-quarter GDP growth could come in at 6.8-7%.
IDFC First Bank expects growth of around 7% in the first quarter. Gaura Sen Gupta, chief economist at IDFC First Bank, highlighted that "the underlying month-on-month momentum is strong," adding that a supportive base effect also contributed to the June surge.
Economic Outlook
The June IIP data bolsters expectations of robust first-quarter GDP growth, providing a solid foundation for the economy amid global headwinds such as elevated energy prices and geopolitical tensions. The broad-based expansion across manufacturing, electricity, and mining signals sustained domestic demand and improving industrial activity. With capital goods and intermediate goods leading, investment activity appears to be gaining traction, a positive signal for corporate capital expenditure plans. For investors and executives, the strong factory output reinforces the case for earnings growth and potential upward revisions to GDP forecasts. The Reserve Bank of India is likely to take note of the growth momentum as it formulates monetary policy, balancing inflation concerns with the need to support expansion.
Sources:
